Stephen Covey, Best-selling author of “The 7 Habits of Highly Effective People”, also wrote “The Speed of Trust.” The premise is that trust is important and that it drives critical areas of performance at work.
But I’d like to talk about the power of trust. That it, what it drives us to do that we would not otherwise be moved or motivated to do.
I own a commercial building. I had a longtime tenant, a nuts and bolts shop, and they moved out in early 2021.
I was bummed at first.
Darn, the cash flow gravy train is over. Meaning that during their 10-year tenancy, I didn’t have to do anything other than expand their footprint once during a lease renewal, to continue collecting cash from them every month.
They had occupied 6,000 square feet. Not a small space. A portion of it was warehouse – unfinished. The remainder wasn’t finished to commercial office standards since they were a tool and fastener showroom, much less to commercial health care office standards which is the prevailing type of structure in the immediate vicinity.
I knew I had some work to do in order to make the space rentable.
My first inclination is always to show unfinished commercial space to prospects possessing an imagination. I hate doing pre-emptive build outs and then having to change something. I’m happy to build what someone wants and would be happy with for the term of their lease. If I adopt the “build it and they will come and it will suit them as it’s built” approach, the prospect usually likes the space, but wants one or more walls moved.
I hate that.
But in mid-to-late 2021, my approach wasn’t working. Perhaps it was fallout from the pandemic, or simply that commercial space wasn’t as hot as residential at the time.
I think it was a combination of both.
Anyway, I had it in my mind to take the 6,000 square feet space and build 8-10 luxury, independent living apartments within. Geared toward seniors and independent living.
After all, the location was perfect. Close to doctors, close to shopping.
The slate was clean – a clear span 60 x 100 foot space within which I could do anything I wanted.
This application seemed to be the highest and best use of the space.
But there were downsides:
I’d have to finish the outside of the building with more aesthetically pleasing cladding and get rid of the commercial/industrial look.
I’d need a new water and sewer tap to provide for the water volume to serve the needs of cooking, cleaning, bathing, and other activities of daily living.
Electrical rehab would be extensive.
Heating and cooling upgrades would be significant.
The rental price point (mid-$1,000s) may be too high in our post-pandemic world.
I had even paid for engineered prints to be produced. If I had a crystal ball, I wouldn’t have done that. Oh, well.
I had doubts about whether I wanted to spend that much money, well into the 6-figure range, to gamble with this concept.
Then a patient of mine asked the question:
“What’s going on where the nuts and bolts place used to be?”
And then I spilled my guts.
How serendipitous – he was looking for a new location for the nearest branch of his multi-location therapy practice.
I showed him the space. Told him the use his imagination.
He envisioned his practice in the space and saw the potential.
We quickly came to terms and I undertook a 120-day buildout that took a blank slate into a premier location for therapy services.
We did so much work – I had to bury a drain line underneath the suite, so the floor had to be cut and I had to dig a 70-foot trench, 3 feet deep. Many days that I would have otherwise been at the gym at 5:30 AM – I was digging.
Then pipe install, backfill, new concrete.
Demo old walls, build new walls.
Heating and cooling work above the ceiling.
New light fixtures and receptacles for the new private offices.
New acoustical ceiling in some areas.
Constructed a vestibule with a second door to shield the facility from the unconditioned outdoor air (the chance that the outdoor air is equal to your current comfort level approaches zero).
Constructing an entry/welcome area and front desk as well as employee workstations.
Added a second restroom.
Added a water heater.
Added a breakroom.
Added a washer and dryer.
Damn, that was a lot of work.
And I didn’t get a nickel up front. In fact, it was all done on my nickel.
Q: Why didn’t you get a deposit or some form of commitment?
A: I had a signed lease. The company has been in business since 2011. Not as long as me. But, they’re bigger than me – they’re an actual business.
(a digression) Robert Kiyosaki, in his book Cash Flow Quadrant, correctly characterizes different types of income. Self-employed people (me in my day job) are in the S quadrant. That’s no different than the E (employee) quadrant. In essence, you own a job and are taxed near the highest rates.
Actual businesses (B quadrant) are different. They multiply and scale one’s efforts. They pay fewer dollars in tax per dollar of revenue.
I knew that the company had grown organically from one to 16+ locations. They didn’t mortgage tomorrow’s income for today’s payroll. I knew the integrity of the owners. I knew that they valued patient care higher than their own bottom line.
Q: OK, how much did you spend without a commitment on the other end?
A: I’m not sure, because I’m still accumulating costs. I think it’s going to total around $75- $80K.
Q: That’s a lot of money.
A: 10 years is a solid lease.
Plus, I now have a 2,000 square foot warehouse (the therapy center consumed 4,000 out of 6,000) with an overhead door to store and stage materials, construction equipment, and more for my other projects. If one considers dollars per square foot, I win! If one considers patient encounters per square foot, the therapy center wins!
Q: Sounds like a win-win.
A: Indeed. I was able to elevate my property at least one, maybe 2 or more steps higher toward the “highest and best use” paradigm.
Consider these before and after pics:
(Which is better, 1 or 2? Pics taken in the exact same space and same camera angle about 75 days apart)
And I’m not worried about them paying rent. They seem to be more concerned than me about starting to do so, now that the construction punch list has been satisfied.
As you think about that, consider the relationships in your life that are centered on implicit trust and respect. And confirm that the cumulative value of those relationships over a career is much in excess of a dollar in your pocket today or tomorrow.
I’d like to offer a sincere and heartfelt welcome to Renue Physical Therapy as they begin to provide patient care in their new suite in my office complex.
Until next time,
Dr. Lee Newton